Weak Demand Weighs on Overall DMF Market Performance

May 29th News

I. Price Trends

According to the commodity market analysis system, as of May 29, the average price of top-grade DMF in China was 4760 CNY/ton. The overall market is showing a trend of ample supply, weak demand, continuously weakening prices, and downward pressure on transactions. This month, there has been a concentration of industry plant restarts, with high production levels maintained, resulting in an abundant supply of goods in the market. However, the downstream terminal demand is weak, with no concentrated restocking needs, leading to a growing mismatch between supply and demand. Additionally, the support from upstream raw materials is weak, leading to frequent price competition at low levels, and a continuous downward shift in the price center, putting overall market conditions under pressure.

II. Cause Analysis

Market Supply: Currently, the DMF market supply in China is loose, with high load on facilities and inventory accumulation. High production coupled with inventory buildup continues to put pressure on prices. Regional price wars are intensifying, with operating rates remaining high, and the industry's operating rate maintained above 75%. Previously shut-down facilities have resumed production, and major facilities in Guizhou and Anyang are operating normally. However, downstream demand is insufficient.

Plant Operations: In terms of plant operations, several key production units that underwent maintenance in April have resumed operation in May. Plants in core producing regions such as Guizhou and Anyang have maintained full-load, normal operations. As a result, the industry’s overall operating rate has remained consistently high—at over 75%—showing a significant increase compared to the previous month. China’s leading producers have fully tapped their production capacity, and the supply of spot goods continues to rise steadily. Overall market supply is abundant, with no signs of supply shortages or unexpected plant shutdowns providing favorable support to the market.

Inventory: In terms of inventory and shipments, due to the dual impact of high production levels and weak demand, social inventory and factory inventory in the industry have continued to accumulate. Most enterprises in China are facing high inventory pressure. To accelerate inventory depletion and recover funds, various producers and traders have initiated regional price wars, leading to frequent appearances of low-priced goods in the market. This has further exacerbated the loose supply situation, causing the shipment pressure in the industry to continue to rise.

III. Future Market Forecast

DMF analysts believe: It is expected that the Chinese DMF market will still maintain a weak and fluctuating downward trend in early June, and may gradually stabilize in the middle to late part of the month, with a very low probability of a significant rebound.